Exclusive: Republicans move to control Keystone approval

WASHINGTON Congressional Republicans, who are urging President Barack Obama to back the Canada-to-Texas Keystone XL oil pipeline, are now working on plans to take the reins of approval from the hands of the president should the White House say no.

North Dakota Senator John Hoeven, whose state is counting on the pipeline to help move its newfound bounty of shale oil, is drafting legislation that would see Congress give the green light to the project by using its constitutional powers to regulate commerce with foreign nations, an aide told Reuters.

After delaying the project past the November 2012 election, Obama was compelled by Congress to decide by February 21 on whether to approve the pipeline that would sharply boost the flow of oil from Canada's oil sands.

Should Obama reject the project, Senate Republicans would look at a bill that would force the go-ahead so work could begin on the $7 billion pipeline, save for a portion going through Nebraska, where the state government continues work on an alternate route, said Ryan Bernstein, an energy adviser to Hoeven.

He said Hoeven is working on the new approach with other key Republican senators, including Senate Minority Leader Mitch McConnell, Richard Lugar, David Vitter, Lisa Murkowski and Mike Johanns.

TransCanada Corp's oil sands pipeline has put Obama in a political bind at the start of what is expected to be a difficult re-election campaign, and has become a useful tool for Republicans seeking to portray Obama as dithering on a project that they say would create 20,000 jobs.

PIPELINE BECOMES ELECTION ISSUE

Environmental groups, an important part of Obama's political

base, have made defeating the line a top priority. They are concerned about the carbon emissions that come from processing the oil sands, and they argue the project will create fewer than 5,000 jobs.

The White House in November delayed its decision on Keystone to find a new route around environmentally sensitive lands in the Nebraska portion of its route. This effectively punted the decision beyond the November U.S. presidential election.

Republicans struck back by inserting language in the December payroll tax cut bill that gave Obama 60 days to grant a permit for the project or explain why it was not in the national interest.

Republicans hope that rising gasoline prices will increase pressure on the White House as the United States pushes for more sanctions on Iran to discourage countries from buying its oil.

Lugar, top Republican on the Senate Foreign Relations Committee, said it does not make sense to slow an oil pipeline from a reliable supplier such as Canada.

"Even if in the future we do not ourselves consume all the Canadian oil imported, having that crude in the U.S. system would give us tremendous flexibility to deal with supply shortages caused by conflict, political manipulation, terrorism, or natural disaster," Lugar said in a January 6 letter to Obama.

'ANY AND ALL LEGISLATIVE OPTIONS' IN PLAY

A spokesman for House of Representatives Speaker John Boehner declined to comment on whether House Republicans would seek to include a new Keystone provision in legislation that will be needed to extend the payroll tax cut that expires on February 29.

The White House and State Department have laid some ground for saying no, said Lee Terry, a Republican representative from Nebraska who is a prominent advocate for Keystone on the House Energy and Commerce Committee.

In December, the administration said imposing the 60-day deadline could violate environmental laws, effectively ruling out a permit.

A majority of voters support the pipeline, Rasmussen poll results from late December show, and most labor unions support it too. Saying "no" to the pipeline could turn it into an election issue, Terry said in an interview.

Obama could try to appease both sides by declaring the project is in the national interest, but making a permit contingent on further study of routes through Nebraska.

But Terry said he believes Republicans will consider "any and all legislative options" if the pipeline is delayed further, including but not limited to making it part of the next payroll tax package.

"Right now, I think everything is on the table," he said.

(Editing by Mohammad Zargham)

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